Amgen Follows California R&D Boom With Plans for Over $600M Facility
Amgen will spend more than $600 million to build a new research and development facility at its Thousand Oaks, California, headquarters, creating hundreds of U.S. jobs — but still it comes with its downsides, as more companies align for more domestic manufacturing.
The project is set to begin in September. It is representative of Big Pharma’s push to expand in the US amid tariff threats on imported drugs and growing pressure to boost domestic innovation.
Cell and gene therapies, biologics and precision medicine require highly specialized infrastructure and talent, much of which is concentrated in life science corridors like parts of California and Boston, Harry Nelson, partner at Leech Tishman, pointed out.
“We are seeing federal and state governments offering targeted tax and investment incentives to attract this industry, tipping the balance in favor of building at home rather than abroad,” he said.
Nelson believes that beyond Amgen, competitors Pfizer, Novartis, Sanofi, and Johnson & Johnson have all signaled plans to expand their US presence, particularly in areas tied to biologics and advanced therapies. Again, the Golden State is providing industry players with an advantage.
“California remains a magnet for R&D with the Bay Area and San Diego leading the way, while Boston continues to be the top global cluster for life sciences talent,” he said.
Since the passage of the Tax Cuts and Jobs Act (TCJA) of 2017 under the first term of President Donald Trump, Amgen has invested over $5 billion in direct capital expenditures in the nation.
Amgen also invested $900 million to expand its Central Ohio biomanufacturing facility last year. The 300,000 square foot site went from groundbreaking to licensure in less than 26 months, making it the most rapid site development in the biotech firm's history.
Plus, Amgen intends to build a second manufacturing plant in Holly Springs, NC, through a $1 billion investment.
Nelson told GlobeSt.com that Big Pharma’s expanded US footprint is a double-edged sword.
“The positive is that it represents a potentially longer-term commitment to US-based science and innovation, creating thousands of high-quality jobs and reinforcing America’s role as the global leader in pharmaceutical research,” he said.
Investments like Amgen’s new R&D hub also strengthen the domestic supply chain, which became a top priority after COVID-19 exposed vulnerabilities in overseas manufacturing.
“The negative is that these expansions can raise concerns about market consolidation and pricing,” according to Nelson.
“As large companies pour billions into new facilities, there is a risk that smaller biotech players may find it harder to compete for talent, resources, and market access. Communities and policymakers will welcome the jobs and investment, but I am worried that Big Pharma’s dominance will translate into higher costs for patients and payers.”
Nelson said this move is economically rational, even though the current administration is using its bully pulpit to push it.
“Federal and state governments are offering significant incentives for biomanufacturing, advanced therapies, and workforce development—many of which didn’t exist even five years ago," he noted.
"While the Inflation Reduction Act introduced new pricing constraints through Medicare negotiations, companies may see greater value in anchoring their operations closer to the regulatory and patient base that drives their global revenue.”
Source: GlobeSt/ALM